LOS ANGELES – Best Buy is making a pre-emptive strike. The nation’s largest electronics retailer is giving itself a makeover before any problems have a chance to develop.
Best Buy is changing its marketing strategy and spending $50 million to redo its stores, trying to ensure that it continues to hold off competitors – not longtime rivals like Circuit City, but a raft of newer players in the electronics market including Wal-Mart, Dell Inc. and eBay.
The company’s president, Al Lenzmeier, noted that in the past, the retailer’s big changes came when it was struggling; this time, it’s anticipating, not reacting to a changing marketplace. This time, he said, the competition is “much more formidable.”
Consultant George Whalin said it makes sense for Best Buy to worry more about Wal-Mart, which is getting more involved in electronics retailing, and less about Circuit City.
“The competitors are a diverse lot today, and for them to continue to grow, they’re going to have to get much better at everything they do, and define themselves in clear ways,” said Whalin of Retail Management Consultants. “And I’m sure that’s what this is all about.”
Best Buy’s plan is to revamp its stores according to the types of customers they serve, a strategy it calls “customer-centricity.” The company came up with five prototypical customers, all of whom have been given names: Jill, a busy suburban mom; Buzz, a focused, active younger male; Ray, a family man who likes his technology practical; BB4B (short for Best Buy for Business), a small employer; and Barry, an affluent professional male who is likely to drop tens of thousands of dollars on a home theater system.
Over the next few years, each of Best Buy’s 608 stores will focus on one or two of the five segments, with 110 stores scheduled to make the switch by February. Best Buy began testing the new strategy about a year and a half ago, eventually trying it at 32 stores.
Best Buy showed off one of the new stores in the Los Angeles suburb of Westminster earlier this month. While much of the store looked like any other Best Buy, its home theater and computer sections were tailored toward the two types of customers this store focuses on – Barry and BB4B.
The store converted its old speaker display room into several model living rooms. In one, a laptop computer was balanced on the arm of an overstuffed leather couch, which faced a plasma screen TV and a surround-sound system. Home theater manager Ryan Markell told of one Barry customer who walked in and said, “I’ll take it.” The man paid $28,000 for all the equipment in the room, plus $2,000 for at-home installation, Markell said.
Best Buy stores that focus on the Jill segment have play areas for kids. Instead of a booming bass beat, the soundtrack at Jill stores is instrumental or children’s music.
Another part of the customer-centricity project transforms the usual roles for employees. They’re now required to help analyze sales, overtime and other figures and suggest ways to improve them.
Employees begin their day by reviewing the previous day’s figures, which are written on a board and compared to the previous month. At a Westminster store meeting open to the media, Chris Smith, an operating supervisor, pointed out that the store had $550 in overtime costs the previous day, and asked employees to suggest ways to reduce it.
Another manager noted that the proportion of customers making purchases dropped over the lunch hour, probably because Best Buy staffers were taking lunch breaks as well. An employee suggested staggering lunch breaks.
“We invented this to keep controllables down, and so far it has worked,” Smith said of the process.
Associated Press
Travis Vaughn (right) of Best Buy shows Danny Renaudo laptop computers at the electronics chain’s redesigned showroom in Westminster Calif.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
